THE VAT increase is likely to have a variable effect on those with moderate incomes.

Some will economise. For instance, more people may cycle rather than use a car on short trips.

Others will use credit cards more than they did and could accumulate more debt.

There will be businesses who will absorb the VAT increase and not pass it on to customers. Others will not be able to afford to do so.

This will benefit businesses already in a strong position. They will increase their market share to the disadvantage of less well placed competitors.

I guess this is all part of the dynamics of a market with winners and losers My preference, if revenue is to be raised, is for taxation on income with a graduated system similar to that introduced by the Labour government in the immediate post war years.

The problem with such a system, unless it is designed differently, is the existence of loopholes which can be found by lawyers and accountants advising wealthy clients.

The Government is trying to deceive us that arrangements which are really regressive are somehow progressive and based on fairness.

Geoffrey Bulmer, Billingham.

BEFORE anyone gets too hot under the collar about the rise in VAT, may I remind them that there is a proposal in front of the European Union for a uniform rate of this tax across Europe.

In most countries the rate is 20 per cent or higher, in some it is 25 per cent.

Any guess as to what a uniform rate might be?

Peter Elliott, Eaglescliffe.